Gold, silver down on technical selling, strong greenback

(Kitco News) - Gold and silver prices are lower in midday U.S. trading Wednesday, as technical selling is featured amid a lack of fresh fundamental news to drive prices. Gold and silver see their near-term technical postures bearish. A strong U.S. dollar and elevated U.S. Treasury yields are bearish outside market elements working against the precious metals market bulls recently. December gold was last down $9.70 at $1,943.10 and December silver was down $0.408 at $23.465.

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A feature in the marketplace at mid-week is rising crude oil prices after Saudi Arabia and Russia decided to extend their oil-production cuts. Nymex crude oil futures prices are firmer and trading around $87.50 a barrel, after hitting a 10-month high on Tuesday. Brent crude oil futures this week pushed above $90 a barrel.

Rising oil prices will have serious economic and marketplace effects, including:

--Higher energy costs for consumers raise the risk of inflationary pressures reigniting just when the major economies of the world were starting to get inflation under control.

--Rising gasoline prices at the pump dent consumer confidence and reduce other discretionary buying by consumers. That would mean less demand for many raw commodities. That’s also bearish for the stock market—right during the historically turbulent months of September and October.

--With gasoline prices in the U.S. presently around $4.00 per gallon and rising, will the Federal Reserve continue raising interest rates, knowing the combination of a spike in gasoline prices and higher interest rates could quickly send the U.S. economy into recession and blow up all the heretofore notions of a “soft landing?"

--Or, will the Federal Reserve have to continue pushing U.S. interest rates higher than they expected as higher energy costs drive up inflation again? “This move by OPEC+ will, of course, be considered by central banks when formulating monetary policy," said Nigel Green of the deVere Group. “If rising oil prices are expected to have a sustained impact on inflation, central banks can be expected to maintain higher interest rates for longer to control soaring prices."

--Crude oil is the leader of the raw commodity sector, which means that when oil prices rally, other raw commodity markets tend to be at least somewhat supported, including the precious metals markets.

Crude oil is a major element that impacts most markets. Traders and investors need to keep an extra close eye on the crude oil market in the coming weeks.

The other key outside market today sees the U.S. dollar index firmer after hitting a six-month high on Tuesday. The benchmark U.S. Treasury 10-year note yield is presently fetching around 4.25%.

Technically, the gold futures bears have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at $1,965.00 and then at Tuesday’s high of $1,972.60. First support is seen at today’s low of $1,940.00 and then at $1,931.00. Wyckoff's Market Rating: 3.5

The silver bears have gained the overall near-term technical advantage and have momentum. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at the July high of $25.82. The next downside price objective for the bears is closing prices below solid support at the August low of $22.585. First resistance is seen at $24.00 and then at $24.25. Next support is seen at today’s low of $23.315 and then at $23.00. Wyckoff's Market Rating: 4.0.

By

Jim Wyckoff

For Kitco News

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jwyckoff@kitco.com

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